If at the end of the second year of a 4-year contract, a company determines total estimated costs are going to exceed the contract price,it immediately recognizes the total estimated loss.it recognizes the total estimated loss in the year of completion if it is using the point-in-time method.it spreads the estimated loss over the remaining two years if it is using the recognizing-revenue-over-time method.it treats the estimated loss as a change in accounting estimate.

International accounting standard require recognition of loss if the estimated costs exceed…

Answered: If at the end of the second year of a…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 25E: Koolman Construction Company began work on a contract in 2019. The contract price is 3,000,000, and...

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If at the end of the second year of a 4-year contract, a company determines total estimated costs are going to exceed the contract price,

it immediately recognizes the total estimated loss.
it recognizes the total estimated loss in the year of completion if it is using the point-in-time method.
it spreads the estimated loss over the remaining two years if it is using the recognizing-revenue-over-time method.
it treats the estimated loss as a change in accounting estimate.

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